Large multinational companies, including Alcoa, General Electric and DuPont, have either said conditions are improving in emerging nations or they expect them to. / Jeff Swensen, Getty Images

by Matt Krantz, USA TODAY

by Matt Krantz, USA TODAY

Stocks may be soaring, but the same can't be said about corporate profits.

More than half of companies in the Standard & Poor's 500, 305, have reported their much-anticipated fourth-quarter earnings, and the results are hardly inspiring. Profit is up just 6.0% from the same period of 2011.

The latest quarter's growth might look good compared with the 2.4% growth reported in the third quarter. And at 6%, that's above the 3.4% growth analysts were calling for in January. The results, though, are well below the 8.4% growth in the fourth quarter of 2011, says S&P Capital IQ.

And factoring in some other costs, including the expenses connected with funding pensions, earnings growth was even less stellar, rising just 0.4%, says S&P Dow Jones Indices. "The good news is that earnings held up," says Howard Silverblatt of S&P Dow Jones Indices.

Earnings growth may be ho-hum, yet, investors don't seem to mind. The S&P 500 is up more than 20% from December 2011. Investors seem to be looking past earnings and focusing on:

â?¢ Surprisingly solid revenue growth. Thanks to cost-cutting and efficiency, companies are squeezing record levels of profit out of their revenue. So for profit to gain, companies need to produce revenue growth, and most seem to be doing so. So far, 70% of companies have beaten revenue forecasts, says John Butters of FactSet. That's well above the 41% in the third and second quarters and higher than the 66% long-term average, he says. Revenue is up 3.3% in the fourth quarter, S&P Capital IQ says.

â?¢ Gradually higher hopes from emerging nations. Large multinational companies, including Alcoa, General Electric and DuPont, have either said conditions are improving in emerging nations or they expect them to, Butters says. That's a radical change from last year and a good sign since demand in those nations has been an important driver of growth.

But investors have to wonder how long stocks can rally when earnings growth is so muted. So far, 80% of the companies to give guidance about the future have warned, above the 60% that normally do, Butters says.

And even more important to the future of stock prices than earnings growth is how much investors are willing to pay for those earnings, says Rod Smyth of RiverFront Investment Group. Stocks currently have a P-E of 15.5, which is below the average since 1988.

If earnings can hold about where they are, and interest rates stay low, investors might be willing to pay 17 or 18 times those earnings, giving stocks additional upside, Smyth says. "Earnings growth isn't the story," he says. "The story is how much investors are willing to pay for those earnings."